According to Delouise Marais, executive head of underwriting at MUA Insurance Acceptances, it is not just insurance providers that are entering the telematics market: "A number of original equipment manufacturers (OEMs) are now looking to install telematics in their vehicles but often for different reasons. For example, manufacturers of luxury vehicles are installing telematics as a diagnostic tool rather than to record all of the data that insurers require to monitor driving behaviour.
"These manufacturers may look to record mileage and possibly speed but many of them are still some years away from changing their solution so that it is in line with an insurance provider's requirements and of course there are additional cost factors in doing so."
Marais notes that while locally there is some trepidation from motorists about how such a device may be used for insurance purposes, in the overseas market the use of telematics as a diagnostic tool as well as a tool to drive down your insurance premium is seen as a positive development and actually ranks high on customer feedback.
There are various devices being offered overseas for different market segments, including a black box, self-installed devices, smartphone apps as well as car connectivity that OEM's may install.
"Insurers are trying to be flexible by allowing different devices for different drivers. For example, high-risk drivers may be required to install the black box while low risk drivers may instead be offered the app or car connectivity. Internationally, we are seeing an integrated telematics solution being offered that combines several role players including insurers, car dealers and OEM's in order to offer a comprehensive telematics solution at a reduced cost," says Marais.
"Overseas studies have also shown that feedback on driving behaviour must be regular and continuous in order to have any real impact, with statistics indicating that 10% of drivers have poor driving behaviour. Half of these improve with feedback, whilst the remaining four are likely to leave and the final policy will have to be cancelled," she says.
Marais notes that insurance providers must also consider the right form of underwriting model to determine how and when to apply discounts. For example, 70% of customers receive a discount mid-term, while the remaining 30% receive a premium reduction at renewal. For insurance providers, it is crucial that claims teams remain engaged with telematics to drive a reduction in claims costs and service levels.
"As the collation and analysis of data has become increasingly important for insurance providers, it has become clear that 'one size does not fit all' and the ultimate solution will need the flexibility to gather data from various sources into a data hub and utilise this in a rating model," says Marais.
"New developments also mean insurers can see situations in context as they may be able to ascertain whether a vehicle is speeding but still driving consistently with other road users, as well as capturing various levels of speeding severity," concludes Marais.
For more information, go to www.mua.co.za.
